A Lesson in Disaster Management

The past couple of weeks have been entirely about Chennai. If there ever was a time for the world to restore its faith in humanity, it is now. And the unlikely source turned out to be social media—particularly Twitter—during the Chennai floods. Those days, when Chennai was receiving incessant rains and parts of the city were getting deeply submerged, the people of Twitter woke up to the crisis in an unprecedented manner. The rescue and relief operations that were carried out in the city were more than ably supported online. Twitter hashtags were used to direct volunteers and officials to people in need, who were cut off from the rest of the world and didn’t have any other means to raise awareness of their plight. There were pregnant women, school children and senior citizens among the ones who were rescued to drier quarters thanks to the heroes on Twitter. The entire operation, and modus operandi (if I may), was simply remarkable.

The cause of the excessive (an understatement, I know) flooding was put on unplanned and greedy urban development. Chennai is only limping back to normalcy, and I’m sure there will be a lot of blame-game in the coming days. But irrespective of what led to the flooding, one thing that is clear to the naked eye is that this was another case that highlighted our severe lack of disaster management capabilities. I’m not going to launch a tirade on this, because I’m in no way qualified to do so. But what I will write about is what the Chennai floods can teach us investors.

Disaster management is important for investors as well because there are certain things that are entirely out of our control. The stock market often crashes for reasons that don’t even directly affect our country. We have no way of knowing, let alone controlling, the stocks that go up or go down. We don’t know how the interest rates will be governed; even the experts can only make an educated guess. These are things that are out of our control. Any of them can hijack our investments. But we can cushion ourselves from any disaster by making sure that the things that are in our control are taken care of in an apt manner.

We can make sure we have diversified our equity investments, so that the underperformance of any one sector doesn’t have a major effect on our portfolio. We can make sure that we don’t let our decisions get influenced by short-term movements of the equity or debt markets. We can make sure we have selected the right kind of investments for the right kind of goals. So on and so forth.

Disaster management is not only about cure, it is about prevention as well. And to prevent a disaster from happening, we can put the things in our control in place so that we don’t have to be worried about the things that aren’t in our hands. Prevention, after all, is better than cure.